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Highlights
- Since January 2023, shares of QAN are on an upward trajectory, with returns of 10.6% on a YTD basis.
- The airline company plans to announce FY23 half year results in February 2023.
- In November 2022, Qantas Group upgraded its profit outlook for the first half of FY23.
Shares of Qantas Airways Limited (ASX:QAN) traded in the green zone on 20 January 2023 at AU$6.56, up by 0.3%, with a volume of over 5 million and market capitalisation of AU$11.88 billion. The group is one of Australia’s largest airlines- considering fleet size, international flights, as well as global destinations.
Market enthusiasts are looking forward to Qantas’ FY23 half year results, especially after the group upgraded its profit expectations in November 2022.
What does QAN expect for the first half of FY23?
The group acknowledges continued strength in travel demand after a tough couple of years. Consumers are finally prioritising travel. Qantas believes that constraints on global capacity is catalysing domestic leisure demand, which is beneficial for the Australian tourism industry.
For the first half of FY23, QAN expects-
- Underlying Profit Before Tax of AU$1.35 billion – AU$1.45 billion, an AU$150 million climb to the profit range provided in October 2022.
- Fuel costs are expected to reach nearly AU$5 billion for FY23 (assuming FY23 underlying into-plane cost of roughly AU$208 per barrel)
- The Group’s net debt was likely to fall to an approximate AU$2.3 billion and AU$2.5 billion by 31 December 2022, nearly AU$900 million better than anticipated. It seems to have been propelled by revenue inflows and deferral of around AU$200 million of capital expenditure to the second half.
© 2023 Krish Capital Pty. Ltd.
Where does Qantas rank?
In November 2022, Qantas stated that operational performance has continued to improve. Consequently, the airline claims to be the most on-time domestic airline in October 2022.
The group believes that the AU$200 million investment in rostering extra staff, sustained recruitment and reserve aircraft will help retain these levels.
What lies ahead?
Nearly 60% of the AU$2 billion in pandemic-related travel credits held by QAN have been redeemed by clients. Total credit usage remains consistent, at AU$70 million a month. QAN notified that additional initiatives could be revealed to promote full use of credits that remain.
More than a million sale fares were unveiled in October 2022 with more sale activity in pipeline. Besides, over 5 million reward seats are offered to frequent flyers. Additional Points Planes could be released. Qantas plans to add capacity in the second half of the year while retaining operational reliability.
QAN has almost finalised a three-year agreement with Jetstar pilots and might reach in-principle agreements with others.
As consumers put high priority on travel ahead of other spending categories, and Australian tourism shows signs of recovery, it will be interesting to witness Qantas’ performance in the months to come.
